tsmc's global expansion faces taiwan government oversight
Taipei, Friday, 28 February 2025.
Taiwan’s Economy Minister, Kuo Jyh-huei, has declared that TSMC, a major chip manufacturer, will require government approval for all overseas joint ventures. This decision arrives amidst reports of TSMC potentially partnering with Intel and impacts TSMC’s strategies for global capacity building. Despite the need for government approval for joint ventures, TSMC faces no restrictions on manufacturing advanced chips overseas, except in China. This announcement has triggered a stock decline for TSMC in Taipei.
Stock reaction and market sentiment
TSMC’s stock (TSM) experienced a fall in Taipei following the announcement [1]. This decline occurred amidst a broader downturn in semiconductor stocks, where companies like Advanced Micro Devices, Micron, Broadcom, and Intel also saw their pre-market gains diminish [1]. Ken Mahoney, CEO of Mahoney Asset Management, noted that market sentiment and its volatile nature are significant factors influencing stock performance [1]. He emphasized the importance of Nvidia’s results for both the stock market and the artificial intelligence sector, suggesting a strong interconnectedness within the tech industry [1].
Strategic implications for tsmc
The requirement for government approval on overseas joint ventures introduces a layer of complexity and potential delay to TSMC’s expansion plans [2][5]. Joint ventures are a key strategy for TSMC to increase manufacturing capacity and gain access to new markets [GPT]. Securing government approval adds a step that could affect the speed and flexibility of these ventures. Despite these potential hurdles, the Taiwanese government has expressed its commitment to supporting TSMC, recognizing its critical role in Taiwan’s economy [3][5]. Minister Kuo stated that the government would fully support this ‘national protection mountain’ [3][5].
Geopolitical considerations and us relations
The backdrop to this regulatory announcement includes ongoing negotiations between Taiwan and the United States regarding potential tariffs [1]. The Trump administration previously encouraged TSMC to acquire a controlling stake in Intel’s chip manufacturing facilities [1][5]. These factors highlight the geopolitical pressures influencing TSMC’s strategic decisions [GPT]. Kuo mentioned that the Ministry of Economic Affairs is gathering information to negotiate the best possible conditions for Taiwanese companies with the U.S. government regarding tariffs [5]. TSMC has already invested $65 billion in new factories in Arizona [5].